Final Results
Speedy Hire PLC
03 June 2004
3 June 2004
SPEEDY HIRE Plc
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2004
Speedy Hire is a leading provider of equipment hire services to UK contractors
and builders, industry, utilities and the public sector, operating from over 280
depots throughout the country. The Group is engaged primarily in tool hire, with
complementary businesses specialising in portable accommodation, surveying,
lifting and power generation equipment.
HIGHLIGHTS
• Turnover up 18% to £170.2 million (2003: £143.9 million1)
• Profit before tax and goodwill amortisation up 17% to £22.0 million
(2003: £18.9 million)
• Profit before tax up by 16.5% to £21.2 million (2003: £18.2 million)
• Basic earnings per share with underlying tax charge2 up 23% to 38.66p
(2003: 31.39p)
• Basic earnings per share up 33% to 42.34p (2003: 31.89p)
• Total dividend per share up 17% to 10.5p (2003: 9.0p)
• Like for like tool hire turnover up 9% - market share increased
• Return on capital employed (before goodwill amortisation) of 17.8%
(2003: 16.9%)
• Comfortable gearing of 65.3% (2003: 66.9%)
1 Restated following introduction of FRS 5 Application Note G
2 Before goodwill amortisation and with an underlying tax rate of 27.0% (2003:
30.9%)
Outlook
'Our customers report full order books with private sector contracts
compensating for the deferral of some public sector work and they have indicated
that they expect this situation to continue for some time to come. Subject to
no material change in the economic outlook, I am confident of reporting further
good progress in the current year.'
David Wallis - Chairman
For further information:
Speedy Hire Plc Hudson Sandler
John Brown, Chief Executive Nick Lyon/James Benjamin
Neil O'Brien, Group Finance Director Tel: 020 7796 4133
Tel: 020 7796 4133 on Thursday 3 June
(thereafter tel: 01942 720000)
Website: www.speedyhire.plc.uk
SPEEDY HIRE Plc
CHAIRMAN'S STATEMENT
I am delighted to report another excellent year for Speedy Hire Plc. Of the
many elements that make towards a successful and profitable business, none is
more important than its people. These results demonstrate the skill and
enthusiasm of Speedy Hire's people and their willingness to 'go the extra mile'
for our customers. The successful outcome for the year is a credit to them all
and I would like to extend the thanks of both the board and shareholders to each
of them.
Financial Performance
Turnover increased by 18% to £170.2 million (2003: £143.9 million) and pre-tax
profits by 17% to £22.0 million before goodwill amortisation (2003: £18.9
million). Earnings per share, before goodwill amortisation and assuming an
underlying tax rate, increased by 23% to 38.66 pence (2003: 31.39 pence). Our
balance sheet continued to strengthen. During the year we invested £58 million
in new equipment in line with our strategy of maintaining the most modern fleet
in the hire services industry. Investment in tools and equipment over the last
three years has totalled £138 million, ensuring that we are well placed to
continue expansion into the future. Our national network has continued to
expand, with very strong growth being generated by our specialist divisions.
Our policy on dividends is for them to be progressive and covered not less than
three times by earnings. The board is proposing a final dividend of 6.8 pence
per share, making a total of 10.5 pence per share for the year as a whole, an
increase of 17%. Even after the strong increase this year, we remain well
within these limits.
The Board
We are constantly seeking to strengthen both the PLC board and the Operating
board ensuring well planned management succession. We are considering the
position of Chief Executive as we prepare for John Brown's retirement next year.
We have a very strong Chief Operating Officer and Finance Director in Steve
Corcoran and Neil O'Brien who have been with the business for 13 years and five
years respectively. Their skills have been supplemented by Andrew Simpson who
joined us in August 2003 as Business Development Director from N M Rothschild.
I am confident we have a first class team to lead the future growth of the
business.
At Operating board level, Colin Brindle and Robin Hall, two long serving
Managing Directors, have reached retirement age and I would like to thank them
for their contribution to the business and wish them well for the future.
However, our ongoing succession planning has ensured that the businesses remain
in safe hands.
Three years ago, shareholders approved the introduction of a Long Term Incentive
Plan (LTIP) for the key people in the company. I am delighted to report that
this will pay out 93% of the maximum amount approved, mirroring the increase in
earnings per share over the last three years. Shareholders have seen a 100%
increase in value as measured by total shareholder return over the LTIP period.
At the AGM in July this year, the board will be seeking approval to introduce a
new LTIP.
Outlook
Current economic statistics indicate that both the UK and global economies are
continuing to strengthen although there are certain obvious factors such as fuel
prices and interest rates outside the control of management which impact on the
business. The diversity of the range of activities of our customers in the
construction sector, both by size and by geography, adds a further level of
stability to our business activities as we have no unduly large exposure to any
one sector. Our customers report full order books with private sector
contracts compensating for the deferral of some public sector work and they have
indicated that they expect this situation to continue for some time to come.
Subject to no material change in the economic outlook, I am confident of
reporting further good progress in the current year.
SPEEDY HIRE Plc
CHIEF EXECUTIVE'S REVIEW
Simple, straightforward and consistent: these are the key words that define
Speedy Hire, our strategy and our track record of delivery. By simply providing
the best kit and employing the best people in our industry, we have grown to
become the clear market leader in UK tool hire. The consistency of our success
is underlined by the fact that this is the twelfth consecutive year of record
results from our hire operations.
Results
The key financial statistics speak for themselves:
• Turnover is up from £143.9 million to £170.2 million, a rise of 18%.
• Operating profit before goodwill amortisation has grown from £21.8 million to £25.5 million, an increase of
17%.
• Group profit before goodwill amortisation and taxation is up from £18.9 million to £22.0 million, a rise of
17%.
• Earnings per share before goodwill amortisation and with underlying tax charge, increased to 38.66 pence, an
uplift of 23%.
• Return on capital employed (before goodwill amortisation) has increased from 16.9 % to 17.8%.
Just as important is the fact that this was by no means an exceptional year for
Speedy Hire.
All parts of the business contributed to our success, with every division making
good like-for-like sales progress. In total we added a net 29 depots to our
tool hire and specialist operations during the year, in line with our targets,
bringing our national total to 286.
Tool Hire
We have consolidated our position as the undisputed leader in the growing UK
tool hire market. Our like-for-like sales growth of 9% during the year
considerably outstripped market growth of around 3%, driving a further increase
in our market share. With national coverage, we are strongly placed to meet the
demands of major UK contractors. We concluded new preferred supplier agreements
with Mowlem and Costain during the year, and more recently with Interserve.
We added 23 depots, 15 through acquisitions and eight through greenfield
developments. We also closed four underperforming units, making a net addition
of 19 during the year. The acquisition in June of Kingfisher Hire in South
Wales added seven depots to Speedy Western, while the purchase in August of St
Vincent Plant, the hire business of the Clugston Group, brought us six depots in
Yorkshire and Lincolnshire to strengthen Speedy Northern. Finally in January we
acquired the Pitreavie business, adding two depots to Speedy Scotland.
Our regional businesses have performed well. Speedy Scotland, which was formed
in 2003, has achieved all our targets. This new regional business was set up to
provide the right management resources and structure to accommodate growth. We
have continued to place emphasis on developing the right infrastructure and
control environment to achieve this.
Speedy Lifting was created in November 2002 and has enjoyed a successful first
year of growth. It has also expanded its network through four greenfield
openings and now operates in 28 locations. This business focuses on the hire of
lightweight lifting equipment and, like our more established specialist
companies, has attractive prospects for growth.
Specialist Companies
We have a proven ability to create specialist niche businesses that complement
our core tool hire operations, and to grow them profitably both by organic
development and the successful integration of acquisitions.
Speedy Space, which specialises in the hire of accommodation and storage units,
again produced record results last year. We expanded its network to 14 depots
and added 900 units to its asset base. It now has more than 13,000 units
available for hire and continues to achieve utilisation rates of just under 90%.
Speedy Power, our power generation business, continued to grow sales and profits
rapidly. We added two new greenfield depots and acquired a third through the
acquisition in July of Ashtead Plant's Big Air division, specialising in the
complementary business of portable, high capacity, high pressure compressed air
systems. This gave the business a total of seven depots at the year end.
Speedy Survey also continued to grow strongly. This business focuses on the
hire of specialist surveying equipment and now operates in 13 locations, with
its network strengthened during the year by one greenfield opening and the
acquisition in September 2003 of the two depots of Leica Geosystems, dedicated
to the hire of construction surveying equipment.
People
We produce growing returns for our shareholders because we have been
consistently willing to invest in the best hire fleet in the UK and in people
who will sell it to our customers with passion and commitment. Our culture and
reward structure provide great incentives to succeed, with performance-related
bonuses accounting for a high proportion of total remuneration. During the year
our 2,375 staff shared bonuses totalling a record £7.6 million. I would like to
congratulate them on their success and thank them all for their individual
contributions to our financial performance and to building our reputation as the
industry leader. This year we introduced our long service award which has been
established to recognise the loyalty of those employees who have committed their
careers to Speedy. It is thanks to the entire Speedy team that we were
recognised once again by the Hire Association of Europe in April 2004, when we
were named as 'Hire Company of the Year' for the second consecutive year, and
also won their award for the best industry website.
The Future
We serve a market that has positive and consistent growth characteristics. We
have considerable opportunities including: -
• Expansion of the existing depot network
• Expansion of the portfolio of specialist businesses
• Capturing more revenue from existing customers
• Improved penetration of non-construction markets
• Further acquisitions
Our major clients in the construction industry remain busy, with record forward
order books. I therefore believe that we are well placed to continue our
successful organic growth, and we have demonstrated over many years that we are
well equipped to enhance this by the successful identification, negotiation and
integration of acquisitions. I am sure that there will be more opportunities to
acquire good quality businesses and assets at reasonable prices over the year
ahead.
We are already the UK's number one in tool hire and the hire of surveying
equipment, and it is our aim to become the number one or two player in every
market we service. I have no doubt that we have the right people and the right
strategy in place to achieve this goal.
John Brown
Chief Executive
Group Profit and Loss Account
For the year ended 31 March 2004
2004 2004 2004 2003
Existing Restated
Note Operations Acquisitions Total Total
£'000 £'000 £'000 £'000
Turnover - Continuing operations 1 164,872 5,359 170,231 143,853
Cost of sales 1 (46,156) (2,026) (48,182) (38,583)
Gross profit 118,716 3,333 122,049 105,270
Distribution costs (17,969) (525) (18,494) (15,612)
Administrative expenses (77,540) (1,948) (79,488) (68,751)
Other operating income 615 - 615 179
Operating profit before goodwill amortisation 24,506 994 25,500 21,770
Goodwill amortisation (684) (134) (818) (684)
Operating profit - Continuing operations 1 23,822 860 24,682 21,086
Net interest payable and other similar charges (3,471) (2,879)
Profit on ordinary activities before taxation 1 21,211 18,207
Taxation 6 (3,601) (4,946)
Profit for the year attributable to the group 17,610 13,261
Dividends on equity shares 7 (4,371) (3,743)
Retained profit for the financial year 13,239 9,518
Pence Pence
Earnings per share
- Basic 2 42.34 31.89
- Diluted 2 41.50 31.44
- Basic pre-goodwill amortisation 2 44.21 33.53
- Basic pre-goodwill amortisation with underlying 2 38.66 31.39
tax charge
Dividends per share 7 10.50 9.00
Group Balance Sheet
As at 31 March 2004
2004 2003
£'000 £'000 £'000 £'000
Fixed assets
Intangible assets 4,988 4,040
Tangible assets 156,685 129,466
161,673 133,506
Current assets
Stocks and work in progress 3,637 3,217
Debtors: amounts falling due within one year 47,291 44,091
Cash at bank and in hand 6,921 7
57,849 47,315
Creditors: amounts falling due within one year (45,422) (63,577)
Net current assets/(liabilities) 12,427 (16,262)
Total assets less current liabilities 174,100 117,244
Creditors: amounts falling due after more than one year (67,295) (25,402)
Provisions for liabilities and charges (13,313) (12,447)
Net assets 93,492 79,395
Capital and reserves
Called up share capital 2,132 2,130
Share premium account 32,692 32,537
Revaluation reserve 50 51
Merger reserve 3,660 3,660
Investment property revaluation reserve 122 177
Capital redemption reserve 26 26
Profit and loss account 54,810 40,814
Equity Shareholders' funds 93,492 79,395
Group Cash Flow Statement
For the year ended 31 March 2004
2004 2003
Note £'000 £'000
Cash inflow from operating activities 3 49,873 39,066
Returns on investments and servicing of finance
Interest received 163 76
Interest paid (2,834) (771)
Interest element of hire-purchase and finance lease rental payments (713) (2,184)
Net cash outflow from returns on investments and servicing of finance (3,384) (2,879)
Taxation (824) (5,618)
Capital expenditure
Purchase of tangible fixed assets (51,999) (12,597)
Sale of tangible fixed assets 15,408 15,898
Net cash (outflow)/inflow for capital expenditure (36,591) 3,301
Acquisitions and disposals
Purchase of businesses (8,964) -
Net cash outflow from acquisitions and disposals (8,964) -
Equity dividends paid (3,910) (3,451)
Cash (outflow)/inflow before financing (3,800) 30,419
Financing
Issue of share capital 157 51
New bank loans 67,000 -
Capital element of hire-purchase and finance lease rental payments (52,396) (22,700)
Net cash inflow/(outflow) from financing 14,761 (22,649)
Increase in cash in the year 4 10,961 7,770
Reconciliation of net cash flow to movement in net debt
For the year ended 31 March 2004
Increase in cash in the period 4 10,961 7,770
Cash (inflow)/outflow from increase/decrease in debt and hire-purchase and (14,604) 22,700
lease financing
Change in net debt resulting from cash flows (3,643) 30,470
New hire-purchase and finance lease contracts (4,327) (27,024)
Movement in net debt in the year (7,970) 3,446
Net debt at 30 March 2003 (53,082) (56,528)
Net debt at 31 March 2004 4 (61,052) (53,082)
Notes to the Financial Statements
For the year ended 31 March 2004
Preparation of preliminary results
The preliminary results have been prepared on the basis of the accounting
policies set out in Speedy Hire Plc's annual report and accounts for the year
ended 31 March 2004.
The preliminary results were approved by the board of directors on 3 June 2004.
The financial information contained in this announcement does not comprise full
accounts within the meaning of Section 240 of the Companies Act 1985. The
financial information contained in this announcement in respect of the year
ended 31 March 2004 has been extracted from the financial statements which have
been audited and reported upon without qualification by KPMG Audit Plc and did
not contain a statement under Section 237 (2) or (3) of the Companies Act 1985.
1. Turnover and profit on ordinary activities before taxation
Turnover (wholly derived from activities within the UK) and profit on ordinary
activities before taxation are analysed by class of business as follows: -
2004 2003
Restated
£'000 % £'000 %
Turnover
Hire services 170,046 99.9 143,669 99.9
Central including property income 185 0.1 184 0.1
170,231 100.0 143,853 100.0
Following the introduction of FRS 5 Application Note G, turnover and cost of
sales categories have been re-classified and the comparative information has
been restated accordingly. The net effect of the reclassification is to
decrease turnover and cost of sales by £3,694,000 (2003: £3,334,000). There is
no overall effect on operating profit.
2004 2003
£'000 £'000
Operating profit on ordinary activities
Hire services 27,729 23,753
Central overheads net of property income (3,047) (2,667)
Operating profit 24,682 21,086
Net interest payable and other similar charges (3,471) (2,879)
Profit on ordinary activities before taxation 21,211 18,207
Central overheads net of property income includes £614,000 (2003: £179,000) of
profit on disposal of properties.
2. Earnings per share
Basic earnings per share is based on the profit after taxation of £17,610,000
(2003: £13,261,000) and the weighted average number of 5p ordinary shares in
issue during the year of 41,594,923 (2003: 41,587,476).
The weighted average number of ordinary shares used for the diluted earnings per
share is calculated as follows:
2004 2003
Number Number
Weighted average number of ordinary shares in issue during the year 41,594,923 41,587,476
Diluting effect of options under Allen Plc Savings Related Share Option 260 -
Scheme
Diluting effect of LTIP shares 839,700 591,232
Diluted weighted average number of ordinary shares 42,434,883 42,178,708
The table below reconciles basic earnings per share to both earnings per share
pre-goodwill amortisation, and earnings per share pre-goodwill amortisation with
underlying tax charge.
2004 2003
Pence Pence
Basic earnings per share 42.34 31.89
Goodwill amortisation charge after tax per share 1.87 1.64
Earnings per share pre-goodwill amortisation 44.21 33.53
Adjustment to tax charge per share to reflect underlying current year tax (5.55) (2.14)
rate of 27.0% (2003: 30.9%)
Earnings per share pre-goodwill amortisation with underlying tax charge 38.66 31.39
3. Reconciliation of operating profit to cash flow from operating activities
2004 2003
£'000 £'000
Operating profit 24,682 21,086
Depreciation charge 24,540 21,109
Amortisation charge 818 684
Profit on sale of tangible fixed assets (4,200) (4,263)
(Increase)/decrease in stocks (173) 147
(Increase)/decrease in debtors (1,536) 235
Increase/(decrease) in creditors 5,041 (547)
Charge in respect of share related awards 701 615
Net cash inflow from operating activities 49,873 39,066
4. Analysis of net debt
At 31 March Cash Other non- At 31 March
2003 Flow cash changes 2004
£'000 £'000 £'000 £'000
Cash at bank and in hand 7 6,914 - 6,921
Overdrafts (4,047) 4,047 - -
(4,040) 10,961 - 6,921
Debt due after one year - (67,000) - (67,000)
Hire-purchase and finance lease contracts (49,042) 52,396 (4,327) (973)
(53,082) (3,643) (4,327) (61,052)
5. Year end gearing (calculated as net debt as a percentage of shareholders' funds) stands at 65.3% (30 March
2003: 66.9%).
6. The charge for taxation for the year represents an effective tax rate of 17.0% (2003: 27.2%). The underlying
effective tax rate excluding adjustments in respect of prior years is 27.0% (2003: 30.9%).
7. The Board has proposed a final dividend of 6.8 pence per share to be paid on 27 August 2004 to shareholders on
the register at 30 July 2004. This, together with an interim dividend of 3.7 pence per share paid on 30
January 2004, makes a total dividend for the year of 10.5 pence per share.
8. The Annual Report and Accounts for the year ended 31 March 2004 will be posted to shareholders on or about 21
June 2004.
This information is provided by RNS
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